TMI Blog2003 (4) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) ought to have held that, the appellant is entitled for the deduction under section 80-O of Rs. 15,13,593." As per the assessment order passed under section 143(3) dated March 28, 2002, for the assessment year 1999-2000, the Assessing Officer has mentioned that the assessee carry on the business of creating design in man-made as well as synthetic fabrics with the help of various designers. Such designs as made by the assessee were being sold to foreign customers as well as local customers and the assessee used to receive designing charges during the year. The Assessing Officer has also observed that for this purpose she has maintained two separate income and expenditure account, profit and loss account, one for the fees received from the local suppliers and one for the fees received from foreign enterprises. Deduction under section 80-O was claimed in respect of the fees received from foreign enterprises. As per the Assessing Officer deduction under section 80-O is admissible in respect of any income received by the assessee from foreign government or enterprises for the use outside India of any patent, invention, design or registered trade mark. According to the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y with respect of income received for patent, invention, design or registered trade mark and not for "professional services" which were earlier available in the old section, therefore, also he has held that the case law cited was not applicable. With these observations it was held that the appellant was not entitled for deduction under section 80-O. Being aggrieved, now the assessee is further in appeal. On behalf of the appellant the learned Authorised Representative, Shri Prakash P. Pandit, appeared and we have heard him at length. After narrating the facts of the case and the reasons on the basis of which the revenue authorities have denied the claim, as stated in the above paras, the learned Authorised Representative has opened his arguments that the word "design" is not defined in the Income-tax Act for the purpose of claim of deduction under section 80-O. Generally, if any word is not defined in a particular Act then to understand the said word the dictionary meaning has to be adopted. The term "design" is used in Fashion Designing Service and the meaning assigned "visible form to the conceptions of the mind mentally conceived at the planning stage to give shape on cloth, pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign" as used in section 80-O do not include the "sketches" made by the appellant. The second reason for disallowance was that the sketches so provided were utilised and used in India by the manufacturers of garments situated in India. He has thus argued that since the language of the section clearly states that the patent, design, etc., to be used outside India then only qualifies for the claim of deduction, therefore, the assessee is not entitled for this claim. The learned Departmental Representative has also relied upon the definition of "design" as per the Designs Act, 1911, and emphasized that the design should be applied to any article for industrial process or mechanical purpose. This definition has excluded the design made for the purpose of construction. This definition has also excluded such design which are in substance a mere mechanical device. As far as the case law relied upon by the appellant of Mittal Corporation [2001] 77 ITD 270 (Delhi), the learned Depart mental Representative has mentioned that while deciding the appeal the learned Commissioner of Income-tax (Appeals) has distinguished the facts of the case, therefore, under these circumstances the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the objectives of a statute is a must and without fulfilling the conditions laid down in plain and clear language cannot enable an assessee to have the benefit of the section. Thus we have to examine the fact of this case to ascertain whether the conditions laid down in this section have been fulfilled or not to avail the benefit. There is no dispute about this fact that the assessee during the year carried on the business of creating "design" to be used on fabrics. It is also not disputed that the designs were supplied to the foreign customers. The Assessing Officer also noted that the appellant has prepared a separate account of the fees received from the foreign enterprises. As per the details made available from Foreign Inward Remittance Certificate the appellant received Rs. 32,85,000 from various overseas clients and claimed deduction under section 80-O of Rs. 15,13,593. It is also not disputed that the amount was received in convertible foreign exchange which was brought into India. So the assessee has fulfilled the basic requirement laid down in this section. The pertinent question raised before us is two fold, firstly, whether the service of providing sketch comes wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y conceived at the "planning" stage is given shape on cloth, paper in the form of drawing or sketches so that such drawings/sketches act as a guide to the work of fashion designing. Since the term "design" has not been defined in the Income-tax Act, therefore, for correct interpretation it is essential to seek the help of the technical meaning as well as the meaning of this term wherever used in other statutes/acts. It is necessary to adopt the meaning of the word used in general parlance to avoid anomalies, absurdities and basically to impart justice. Considering the manner in which the appellant has provided sketches, annexed in the paper book we are of the opinion that the sketches used for the manufacture of garments qualifies for the claim of deduction under section 80-O for the term used "design". In view of the above discussions a conclusion can be drawn that the services provided by the appellant comes within the purview of the definition of "design" as men tioned in section 80-O. On this count we do not agree with the view adopted by the revenue authorities and hereby hold that the appellant has rendered service of providing design to foreign enterprises for which she is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from India and are received by a foreign Government or enterprise outside India, deduction under section 80-O would be available to the person rendering the services even if the foreign recipient of the services utilizes the benefit of such services in India." Since the word "use" is a very general word, therefore, it is necessary for the courts to give a practical meaning so that the purpose and object of the statute could be achieved. Keeping in view this aspect the hon'ble Delhi High Court in the case of E. P. W. Da Costa v. Union of India [1980] 121 ITR 751 had taken a view that, it is necessary that the use to which the information is to be put must be practical and utilized by a foreign enterprise though applied for the benefit of Indian audience. In the instant case the petitioner rendered the services in making an "audience research study" in the Hindi speaking areas of the Union of India to assess the radio listening habits of Indians and supply such information to the British Broadcasting Corporation (BBC). This was held to be covered by the provisions of section 80-O. The British Broadcasting Corporation was said to have "used" the information when it formulated or mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied by the appellant. On her part the appellant had completed her job by supplying the design and the decision was totally rested with the foreign parties to give the orders of stitching either in India or to any other country. As far as the appellant is concerned, she has rendered services from India, which were factually used in foreign countries by the respective foreign parties. Regarding the genuineness of the services rendered and the fact that the assessee received income in convertible foreign exchange has not been doubted by the Revenue, hence we discard this argument of the learned Departmental Representative.
Considering the facts involved in the appeal before us, the objects of the provisions of section 80-O and the material available on record, we are of the view that the assessee who is resident in India has genuinely provided the information in the form of "design" outside India to foreign enterprises and in consideration earned foreign exchange which was brought to India, therefore, eligible for deduction under section 80-O. The ground raised by the assessee is allowed.
In the result, the appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X
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